Rumor: Solana Project Allegedly Extorts $5 Million to Stay in Ecosystem

The turbulence for Solana doesn't seem to be ending anytime soon, as the ecosystem finds itself entangled in a fresh wave of rumors involving alleged extortion by a project within its own network.

Note: This article is based on rapid information circulating within the Twitter community. No verified sources have confirmed the identity of the project involved. Coin68 will provide updates if new data emerges.

On the morning of December 5, Twitter was abuzz with information from the account “@functi0nZer0” about another negative development concerning Solana. According to the account, a project built on Solana allegedly demanded a $5 million ransom from the Solana Foundation to continue operating within the Solana ecosystem.

The post quickly attracted significant attention and speculation about the project's identity, with many pointing fingers at DeGods, currently the largest NFT project on Solana.

The suspicion around DeGods is not unfounded. Given the current crisis Solana faces since the collapse of FTX, and despite reassurances from Solana’s founders and efforts to fork Serum (SRM) post-hack, the damage has been severe. In just one week, Solana saw $700 million evaporate from its ecosystem.

As a result, numerous exchanges halted USDC and USDT deposits and withdrawals on the Solana network, leading to a significant shift of $1 billion in USDT from Solana to Ethereum.

With a major project like DeGods experiencing rapid growth, concerns about its future are understandable. Only a project of DeGods' stature could potentially have the audacity to issue such a direct “threat” to the Solana Foundation.

Both DeGods and y00ts (developed by Dust Labs) dominate nearly 70% of the NFT trading volume on Solana. Losing both Dust Labs collections would spell disaster for Solana's NFT market.

Real data confirms this concern, as the total NFT trading volume on Solana is currently 737,142, with y00ts and DeGods accounting for 237,440 and 232,900 respectively.

Total NFT Trading Volume on Solana as of 11:29 AM on December 5, 2022. Source: Defillama

Additionally, some users argue that since FTX Ventures and Solana Ventures were early investors in Dust Labs’ $7 million seed round, the bankruptcy of FTX could have led to significant losses for these VCs. This scenario might explain the alleged pressure on the Solana Foundation, aiming to move DeGods to Ethereum and salvage their investment.

On the other hand, some speculate that former FTX CEO Sam Bankman-Fried could be behind the alleged extortion. Given his claim of having only $100,000 in assets last week, it’s suggested that he might be manipulating DeGods to extract funds from the Solana Foundation under the guise of FTX Ventures.

Stay tuned for further updates as the situation develops.